China's parliament, the National People's
Congress, adopted two landmark laws -- the property rights law and the
enterprise income tax law -- Friday morning at the closing ceremony of its
annual session in the Great Hall of the People in Beijing.
Deputies to the National People's
Congress walk to the Great Hall of the People in Beijinig for the closing
ceremony of their annual session March 16, 2007. The lawmakers adopted two
landmark laws -- the property rights law and the corporate income tax law.
The corporate income tax law was adopted with 2,826 votes for and 37 against,
and 22 abstentions, a key signal of a phase-in end of superior treatments to
foreign investors for two decades.
The 60-article law was ratified by the
lawmakers as they concluded their 11.5-day annual full session at the Great Hall
of the People in downtown Beijing.
The voting result, announced by NPC
Standing Committee Chairman Wu Bangguo, was warmly applauded by lawmakers. Four
legislators did not cast their votes. The law is due to take effect on January
Experts say the law marks an adjustment of China's policies
toward foreign investment in the current times.
The law, which sets
unified income tax rate for domestic and foreign companies at 25 percent, came
after years of criticism that the original dual income tax mechanism is unfair
to domestic enterprises.
Currently, the actual average income tax burden
on Chinese companies is 25 percent, while that on foreign enterprises is 15
percent. Many people think such a policy forces domestic businesses to face
tougher competition since China's accession to the World Trade Organization
(WTO) in 2001.
"It's a basic requirement of the WTO to create a fair
environment for competition, and the new unified income tax will, in a real
sense, grant foreign investment the same treatment as domestic businesses," said
Miao Gengshu, chairman of the China National Foreign Trade Transportation
Apart from increased income tax, foreign companies will
also be wiped from some other tax incentives, including pre-tax reduction and
tax rebate for re-investment, in the future, insiders say.
gradually taking back preferential policies toward overseas-funded businesses,
which has been levied the same tax as their domestic counterparts in the use of
urban land from January 1 this year.
It only took less than a minute for
the nearly 3,000 NPC lawmakers to pass the much-revised bill, which had gone
through a lengthy legislation process of more than 13 years and a record seven
readings, by an overwhelming majority as the NPC concluded its annual full
session in the Great Hall of the People in downtown Beijing.
lawmakers applauded warmly after NPC Standing Committee Chairman Wu Bangguo
announced the voting results. A total of 2,799 lawmakers voted for the law and
52 against. Thirty-seven abstained and one didn't cast vote.
247-article law, which is due to come into effect as of October 1, 2007,
stipulates that "the property of the state, the collective, the individual and
other obligees is protected by law, and no units or individuals may infringe
This is the first time that equal protection to state and
private properties has been enshrined in a Chinese law, which analysts say marks
a significant step in the country's efforts to further economic reforms and
boost social harmony.
Observers said the laws are the fruit of China's
reform and opening up and will in turn stimulate the reform and opening-up of
Wang Shengming, vice-director of the Commission of
Legislative Affairs of the NPC Standing Committee, said the property law showed
the spirit of reform and opening up of China, since it protects the order of the
socialist market economy and grants equal protection to public and private
Liu Hezhang, a member of the NPC Standing Committee, said the
property law is a signal of further reform and opening up as its adoption
suggests China will not start a new round of "capitalism or socialism" dispute.
Meanwhile, Lu Jianzhong, NPC deputy and chairman of Shaanxi Jiaxin
Group, said the corporate income tax law, which puts domestic and foreign-funded
enterprises on an equal footing for income taxes for the first time since
China's opening up began in 1978, brings China's economy more in line with
Government work report
The lawmakers on Friday also endorsed the government work report delivered by
Premier Wen Jiabao that underlines the people' s livelihood and sets the
economic growth target at about 8 percent for this year.
report was approved with 2,862 votes from the 2,889 NPC deputies present at the
closing meeting of the parliament' s annual session.
Wen said in the report that the most important task of the government this
year is to promote sound and fast economic development, with the growth of gross
domestic product (GDP) projected at 8 percent, lower than the staggering 10.7
percent in 2006, which analyst say would be conducive to healthy economic
development in the country.
President Hu Jintao and other top leaders also attended the closing meeting,
presided over by NPC Standing Committee Chairman Wu Bangguo.
Prior to the ratification, the State Council, or cabinet, made 33
modifications, including 12 major ones, to the report according to the opinions
of parliament members and political advisors.
The Chinese government promised to spend 391.7 billion yuan (50. 25 billion
U.S. dollars) on agriculture, rural areas and farmers this year, as it vows to
develop modern agriculture and build a new countryside.
To ensure all citizens share the fruits of China's reform and open-up, Wen
said the government will expand the subsistence allowance system to all rural
poor, with an aim to bring some 23.7 million poverty-stricken people under the
social security net this year.
"We need to make education a strategic priority and accelerate the
development of all types of education at all levels," said the premier.
The government is expected to invest 85.85 billion yuan (11 billion U.S.
dollars) in this field this year, an increase of 41.7 percent over 2006.
The premier reiterated that the government will meet the energy saving and
pollution control targets between 2006 and 2010 despite last year's setback.
The government set the goal of reducing energy consumption per unit of GDP by
20 percent and major pollutants discharge by 10 percent in the country's 11th
Five-Year Plan for the 2006-2010 period.
A major task of the government to improve the people's livelihood is to
promote medical services in rural areas. To energetically promote the new type
of rural cooperative medical care system, the government will expand the trial
of the services "cover over 80 percent of all counties, county-level cities and
city districts in China," the premier said.
For this purpose, the government will allocate a total of 10.1 billion yuan
(1.3 billion U.S. dollars) this year, 5.8 billion yuan (750 million U.S.
dollars) more than last year.
"We will improve the mechanism for setting the RMB exchange rate, strengthen
and improve foreign exchange administration, and actively explore and develop
channels and means for appropriately using state foreign exchange reserves," Wen
said, adding, "We will adopt a variety of measures to gradually ease the
imbalance in international payments."
In the government work report, which covers every facet of the country's
economic and social development, Wen said "building a solid national defense
system and a powerful people's army is a strategic task in socialist
According the draft 2007 budget, which was also passed along with the annual
plan for economic and social development, defense budget of China will increase
by 17.8 percent to 350.92 billion yuan (44.94 billion U.S. dollars).
The NPC annual session, which began on March 5, also approved the property
law and enterprise income tax law, as well as resolutions on the election of NPC
deputies on the mainland, Hong Kong and Macao.
Lawmakers attending the annual session also adopted the reports on the work
of China's Supreme People's Court and Supreme People's